Question

Tandy Corporation uses a job-order costing system with a single plant-wide predetermined overhead rate based on machine-hours. The company based its predetermined overhead rate for the current year on total fixed manufacturing overhead cost of $249,000, variable manufacturing overhead of $3.80 per machine-hour, and 30,000 machine-hours. The company has provided the following data concerning Job X784 which was recently completed: Job E's manufacturing cost: Total machine-hours 250 Direct materials $ 470 Direct labor cost $ 5,500 If the company marks up its unit product costs by 30% then the selling price for Job X784 is closest to: Group of answer choices $2,698.50 $12,693.50 $7,761.00 $11,693.50

Answer 1

Answer:

Selling price= $11,693.5

Explanation:

Giving the following information:

TJob X784:

Total machine-hours 250

Direct materials $ 470

Direct labor cost $ 5,500

The company marks up its unit product costs by 30%

First, we need to calculate the predetermined overhead rate:

Predetermined manufacturing overhead rate= total estimated overhead costs for the period/ total amount of allocation base

Predetermined manufacturing overhead rate= (249,000/30,000) + 3.8

Predetermined manufacturing overhead rate=$12.1 per machine hour

Now, we can calculate the total cost and selling price:

Total cost= 470 + 5,500 + 12.1*250

Total cost= $8,995

Selling price= 8,995*1.3= $11,693.5